CAROLINA P. RAMIREZ, FERDINAND P. RAMIREZ, FRANCIS P. RAMIREZ, FREDERIC P. RAMIREZ, AND THE INTESTATE ESTATE OF FRANCISCO RAMIREZ, JR., VS. HON. COURT OF APPEALS, HON. JUAN A. BIGORNIA, JR., IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF ILAGAN, ISABELA, BRANCH 18 AND SPOUSES LORE

Ruling

WHEREFORE, the decision of respondent Court promulgated on April 22, 1976 and its resolution of June 22, 1977 are hereby reversed and set aside. The Deed of Absolute Sale between the parties with the option to repurchase is declared an equitable mortgage and, petitioners [Claravalls] are declared entitled to redeem the mortgaged property which shall be effected upon the payment of their mortgage debt to private respondents [Ramirezes] in the amount of P85,000.00 with legal rate of interest from December 31, 1967, the time the loan matured until it is fully paid. [5] (Emphasis supplied) The decision of this Court having become final and executory, [6] possession of the property was turned over to private respondents after they settled their obligation to the spouses Ramirez. Following the death of Francisco Ramirez, Jr. or on November 21, 1994, private respondents filed a complaint [7] before the RTC of Ilagan for accounting and damages against herein petitioners, namely, Ramirez's Intestate Estate, his widow Carolina P. Ramirez, and their children Ferdinand P. Ramirez, Francis P. Ramirez and Frederic P. Ramirez. The complaint, docketed as Civil Case No. 834, alleged, inter alia , that: (1) the spouses Ramirez acted fraudulently and in bad faith in refusing and obstructing the redemption of the property by private respondents from January 1, 1968 up to December 31, 1993 during which petitioners were receiving rentals from the tenants of the property which must be accounted for and returned to private respondents; (2) before the possession of the property was turned over to private respondents, petitioners "vandalized, destroyed and carried away many portion[s]/parts" of the improvements on the property, causing damages amounting to Five Hundred Thousand (P500,000.00) Pesos which petitioners must pay and be liable for; and (3) private respondents were forced to litigate in order to protect their rights and interests over the property, hence, petitioners must be held liable for actual damages and expenses of litigation. [8] Petitioners filed a motion [9] to dismiss private respondents' complaint, alleging that "since the issue of rentals [was] raised in [Civil Case No. 2043], but not favorably acted upon in favor of [private respondents], the latter are barred from raising anew the same issue in another litigation." [10] Further, petitioners alleged that the complaint does not state a cause of action since prior to the date when redemption was to be effected, the registered owners of the property were the spouses Ramirez who were entitled to the rentals and fruits thereof, and "under our law on succession, debt or liability is not passed to the heirs of a decedent." [11] By Order of June 7, 1995, [12] Branch 18 of the Ilagan RTC deferred the resolution of petitioners' Motion to Dismiss upon a finding that the grounds raised therein did not appear indubitable. Petitioners' motion [13] for reconsideration of said order having been denied, [14] they fi